Types-Of-Bankruptcy
Albuquerque Bankruptcy
What are the types of bankruptcy that can be filed in Albuquerque, New Mexico and other cities in the United States? There are many different types of bankruptcy procedures and each is known by the title of the Chapter of the Federal Bankruptcy Act. The most common types of bankruptcy file are Chapter 7 and Chapter 13.
Types of Bankruptcy
Bankruptcy is a type of legally declared inability or the impairment of the ability of a business or an individual to pay off its creditors. In the majority of cases, businesses or individuals opt to declare bankruptcy on their own volition in an effort to wave their excessive debts. However, there are some instances in which creditors can sign a petition that forces an individual into bankruptcy in a last ditch effort to recoup some portion of their losses, however, this is relatively rare since, if this occurs, the creditors will only get a small portion of their investment, so this instance of involuntary bankruptcy is usually reserved for those that have no possibility of paying off his, her or its debtors.
Types of Bankruptcy in Albuquerque, New Mexico
There are Six Essential Types of Bankruptcy, each of which is used for a different situation. These types of bankruptcy are divided into categories called chapters.
These different forms and types of bankruptcy include the following;
Chapter 7 Bankruptcy- This is the type of bankruptcy that involves basic liquidation of an individual or business’s assets. It is also known as straight bankruptcy because it is the quickest and most easily understandable version of bankruptcy that is available. s the one of the most common types of bankruptcy used by individuals, but may also be used by businesses. This type of bankruptcy is the most severe. Under Chapter 7, a court-appointed trustee collects the individual’s assets. The trustee sells the assets for cash and pays the proceeds to the individual’s creditors. Assets that are exempt under federal or state law do not have to be liquidated. Once the Chapter 7 process is final, the filing cannot be repeated for six years.
The purpose of a Chapter 7 bankruptcy is to allow a person to obtain a fresh start, free from creditors and free from the pressures of overwhelming debt. Basically Chapter 7 is a plan for personal financial dissolution. As with a business Chapter 7 bankruptcy, a court-appointed trustee takes possession of all nonexempt property and assets, converts them to cash, and distributes the funds to creditors. Exempt items in this type of bankruptcy include specified items, a certain amount of money dictated by the trustee, and some personal effects. Most debtors are able to keep property they need to get on with their lives. After filing for relief under Chapter 7, an individual debtor might, as dictated by the trustee, receive a discharge.
Albuquerque Bankruptcy Attorneys and Lawyers
Types of Bankruptcy You Can File
Chapter 9 Bankruptcy- This type of bankruptcy is also known as municipal bankruptcy that is utilized as a federal mechanism for the involved rehabilitation and resolution of multiple or singular municipal debts. Chapter 9 is similar to Chapter 11, except it is used by a municipality, and therefore not relevant to the individual debtor
Chapter 11 Bankruptcy- This type of bankruptcy is known as reorganization or rehabilitation bankruptcy and is primarily used by business debtors which liquidate some functions and assets while a business continues to maintain their day to day operations relatively undisturbed. s targeted to larger businesses, but individuals may also use this reorganization plan. Chapter 11 is similar to Chapter 13, but with more requirements. However, if all a debtor needs is a plan to pay off debts, then a Chapter 13 or Chapter 11 is preferable, rather than a Chapter 7, particularly when trying to reestablish their creditworthiness.
Chapter 12 Bankruptcy- This type of bankruptcy is a very rare form of bankruptcy that is usually used for the rehabilitation of fishermen or farmers that have lost a portion of their capital due to bad catch or harvest, among other reasons. Chapter 12 is specifically for farm owners. In this type of bankruptcy the debtor still owns and controls his assets and works out a repayment plan with the creditors. Chapter 13 is like Chapter 11, but for individuals. The debtor retains control and ownership of assets. He also works out a three to five-year repayment plan. Some portion of the debt may be discharged, depending on the income of the debtor. There are also limits on the amount of debt involved.
Chapter 13 Bankruptcy- This type of bankruptcy is a rehabilitation bankruptcy that comes with a payment plan for those that have a regular source of revenue or know someone that is willing to pay the creditors in installments while a person’s finances is being restored. s designed for an individual debtor with a steady source of income. It can also be used by small businesses. This type of bankruptcy is also called “individual reorganization,” Under the Chapter 13 bankruptcy plan the debtor must settle his debts over a three to five year period. Under Chapter 13, the debtor is allowed to keep his property. At a confirmation hearing, the court either approves or disapproves the plan. There are no time restrictions on when a Chapter 13 can filed.
Why would I file Chapter 13? You might choose to file Chapter 13 instead of Chapter 7 if you have secured debt, like a car loan, that you want to continue paying. Since Chapter 7 bankruptcy requires you to give up certain liquid assets, Chapter 13 might be a better option if you want to keep these assets. Furthermore, if your income above the median for your family size in your state, you will not be able to file Chapter 7 bankruptcy.
Like Chapter 7, you must receive credit counseling from an approved credit counseling agency.
Chapter 15 Bankruptcy – This type of bankruptcy is also known as ancillary bankruptcy and is used primarily in international situations. It was established so that foreign investors and debtors are more able to clear debts that they cannot pay and cannot be held liable in the issuing country. Chapter 15 Type Bankruptcy is the newest type of bankruptcy. This type of bankruptcy is used when a bankruptcy involves matters outside of the United States.
